Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102350
Authors: 
Hirsch, Boris
Zwick, Thomas
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8417
Abstract: 
Using linked employer-employee panel data for Germany, this paper investigates whether firms implement real wage reductions in a selective manner. In line with insider-outsider and several strands of efficiency wage theory, we find strong evidence for selective wage cuts with high-productivity workers being spared even when controlling for permanent differences in firms' wage policies. In contrast to some recent contributions stressing fairness considerations, we also find that wage cuts increase wage dispersion among peers rather than narrowing it. Notably, the same selectivity pattern shows up when restricting our analysis to firms covered by collective agreements or having a works council.
Subjects: 
selectivity
real wage cuts
real wage rigidity
Germany
JEL: 
J30
J31
Document Type: 
Working Paper

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